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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of Quanta Services Inc was -1.18. The lowest was -3.33. And the median was -2.44.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Quanta Services Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 0.9188||+||0.528 * 1.068||+||0.404 * 0.9207||+||0.892 * 1.1904||+||0.115 * 0.9824|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0472||+||4.679 * -0.0426||-||0.327 * 1.1913|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $1,643 Mil.|
Revenue was 1886.956 + 2052.982 + 2171.144 + 1864.55 = $7,976 Mil.
Gross Profit was 252.661 + 327.03 + 352.971 + 281.448 = $1,214 Mil.
Total Current Assets was $2,388 Mil.
Total Assets was $6,141 Mil.
Property, Plant and Equipment(Net PPE) was $1,480 Mil.
Depreciation, Depletion and Amortization(DDA) was $202 Mil.
Selling, General & Admin. Expense(SGA) was $699 Mil.
Total Current Liabilities was $1,124 Mil.
Long-Term Debt was $115 Mil.
Net Income was 53.484 + 66.576 + 94.648 + 81.082 = $296 Mil.
Non Operating Income was -0.212 + -0.466 + -0.378 + -1.233 = $-2 Mil.
Cash Flow from Operations was 189.227 + 273.301 + 64.119 + 32.756 = $559 Mil.
|Accounts Receivable was $1,502 Mil.
Revenue was 1762.574 + 1817.623 + 1645.132 + 1474.377 = $6,700 Mil.
Gross Profit was 272.071 + 302.843 + 273.053 + 241.284 = $1,089 Mil.
Total Current Assets was $2,214 Mil.
Total Assets was $5,827 Mil.
Property, Plant and Equipment(Net PPE) was $1,270 Mil.
Depreciation, Depletion and Amortization(DDA) was $170 Mil.
Selling, General & Admin. Expense(SGA) was $561 Mil.
Total Current Liabilities was $982 Mil.
Long-Term Debt was $5 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(1642.675 / 7975.632)||/||(1501.857 / 6699.706)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(327.03 / 6699.706)||/||(252.661 / 7975.632)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (2387.64 + 1480.097) / 6140.834)||/||(1 - (2214.457 + 1269.656) / 5826.62)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(169.554 / (169.554 + 1269.656))||/||(201.687 / (201.687 + 1480.097))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(698.945 / 7975.632)||/||(560.66 / 6699.706)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((115.002 + 1124.31) / 6140.834)||/||((4.556 + 982.475) / 5826.62)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(295.79 - -2.289||-||559.403)||/||6140.834|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Quanta Services Inc has a M-score of -2.65 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Quanta Services Inc Annual Data
Quanta Services Inc Quarterly Data